I am seeking suggestions/opinions on a payday loan which will be defaulting in 7 days, due to unavailability of funds.
SUMMARY: I have a payday loan that was due on a certain date. I wanted to repay the loan, but I was not be able to pay in full according to the original due date. In an attempt to be proactive, I called the loan company PRIOR to my due date to explain that, due to a crisis within my home, I would not have the funds available in my bank account to pay the full amount. They extended the due date by 10 days, but still 4 days short of my next paycheck (which still will not leave me with sufficient funds).
After re-reading my contract and Illinois laws covering payday loans, I called the loan company again, prior to the new due date, to request an Extended Payment Plan. I am told that I am not eligible for an EPP, not only because my account is not yet in default, but also because I would have to wait 35 days AFTER the default date to qualify. The kicker is that my account would immediately go to their collections upon default, and they would be able to initiate legal action *28* days after default, leaving me to twist in the wind for 7 days until I'm eligible for an EPP. I even called their collections department to find out what options I would eventually have for repayment, but they cannot give me any information until the loan is actually in default, and it reaches their office with all the pertinent details.
The loan company is a legitimate company. I have done business with them a number of times within the past 8-10 years, with no prior problems ever having to repay them. I signed an authorization to direct debit the full amount, which I know they will initiate, but that will leave me with extended overdraft fees because of the amount of time it will take to cover the debit.
QUESTION: Do I have any other legal options for repaying my loan in installments, without them accessing my bank account?
Thank you in advance for any suggestions you can provide.
2 Answers from Attorneys
Take the authorization off of your bank account. You are swimming with sharks. If its a third party collector you can send a cease and desist. If they threaten you with arrest, they might be in violation for the FDCPA.
Respectfully IMHO no payday loan company is "legitimate" as they charge immorally high rates. But you are subject to their rules. You knew going in what those rules were. Your personal emergency may have been dealt with by other means. Try getting funds from other sources to pay the loan off, otherwise you may have to pay their legal fees too. The only other alternative is a bankruptcy.